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Bennett v. Jefferson County, AL

Two circuits and a BAP now invoke ‘equitable mootness’ to dismiss appeals from orders confirming chapter 9 municipal debt adjustment plans.

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Case Type:
Business
Case Status:
Reversed and Remanded
Citation:
15-11690 (11th Circuit, Aug 16,2018) Published
Tag(s):
Ruling:
The doctrine of equitable mootness applies to confirmed plans in chapter 9 (as well as chapter 11 and 13) bankruptcy cases. To the extent that constitutional rights may be affected in chapter 9 bankruptcy cases, it is difficult to foresee how principles of federalism may play out in future cases. Further, constitutional rights may be forfeited by the failure to timely assert the right before a tribunal having jurisdiction. Here, the doctrine of equitable mootness bars the appeal because Jefferson County had taken significant measures to perform under the confirmed plan.
Procedural context:
The Jefferson County, Alabama, chapter 9 plan called for the bankruptcy court to retain jurisdiction over the County to ensure that sewer fees were increased over a 40-year period in accordance with the confirmed chapter 9 plan. Certain ratepayers appealed the confirmation order, but did not seek a stay of the confirmation order pending appeal. The district court ruled that the appeal was neither constitutionally nor equitably moot. The district court also ruled that, even if equitable mootness applied in chapter 9 cases, it would not dismiss the ratepayers' appeal because the district court could fashion some relief for the ratepayers. The district court certified its ruling for an interlocutory appeal, and the ratepayers appealed.
Facts:
This case arose out of the Jefferson County chapter 9 bankruptcy case and the confirmation of Jefferson County's plan over the objections of certain citizens ("ratepayers"). The confirmed chapter 9 plan contained mandatory sewer fee increases over 40 years. The increased fees would be used to pay for new sewer bonds that would be issued to pay the distribution to holders of Jefferson County's pre-petition sewer bonds. Jefferson County filed a motion to waive the stay of the effectiveness of the confirmed plan. The ratepayers did not object. The bankruptcy court waived the stay in accordance with Fed. R. Bankr. P. 3020(e). The ratepayers then filed a notice of appeal after confirmation but before the effective date. The ratepayers did not ask for a stay of the confirmation order pending appeal. In the absence of an stay, Jefferson County issued the new sewer bonds in accordance with the confirmed chapter 9 plan. Jefferson County then moved to dismiss the appeal due to equitable mootness and for other reasons. The ratepayers argued, among other things, that the bankruptcy court's retention of jurisdiction to ensure rate increases over 40 years violated Alabama state law. The district court concluded that the plan was not equitably or constitutionally moot.
Judge(s):
TJOFLAT, MARTIN, and JORDAN

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